Since the beginning of 2020, with the start of COVID-19, the real estate market has seen vast increases in total homes sold and record-setting selling prices. With the added demand, the availability of housing over the past two years has remained a constant struggle for potential homebuyers. Now almost three years later, the market is starting to slow down. Increased mortgage rates were the first major impact on the housing market; which caused interest rates on 30-year conventional loans to soar to 5-6%. While mortgage rates have started to creep below 5% in the past few weeks, there is still concern by many that a housing market “correction” or “recession” is on the horizon. While there is no doubt the velocity of sales and prices has slowed, it would be a stretch to say that an impending recession is imminent. In fact, by jumping to this conclusion, a recession could become a self-fulfilling prophecy.
After the 2008 financial crisis, Fannie Mae and Freddie Mac cracked down on subprime lending – one of the main culprits behind the Great Recession. In the years since, lenders have been especially careful when handing out money. Even for the most credit-worthy homebuyers, the mortgage application process is more robust and the requirements to qualify higher than ever. This is one of the reasons we recommend working with a local lender that you can trust. Having a lender that understands your goals and is able to help walk you through the entire process can make all the difference.